When it comes to flipping houses, many external variables need to be considered. You have to make sure that everything from the right strategy is used down to a successful budget and business plan. One thing that many house flippers fail at is qualifying for a loan. To get your hands on some money, you need to know what lenders will consider when they read over your application. Here are tips on how to qualify for a fix and flip loan.
1) THE SIZE OF YOUR DOWN PAYMENT MATTERS
If you do not have enough cash flow to come up with 20% of what you intend to pay as your home’s price tag at closing, lenders won’t approve your application no matter how good or bad you think it is your credit score. It is better if you find someone willing to lend their money to you through a private lender.
2) USE THE EQUITY LOAN METHOD OF GETTING YOUR FIX AND FLIP LOAN
Applying for a second mortgage is not as complicated as it seems because most lenders are willing to approve second mortgages to have their money back without any trouble. You can also choose this option if you do not want to ask your relatives or friends for financial support but still want to receive more cash funding. Just make sure that you have enough equity in your home already before applying for another mortgage.
3) GET READY WITH ALL DOCUMENTS NEEDED
Once you’ve applied for a fix and flip loan, ensure that you get ready with all the documents required by lenders, such as tax returns, employment records, bank statements, etc. You have to be able to back up all the claims that you have stated in the loan application documents, especially when it comes down to proof of income. Loan lenders would want proof of everything before they give you any money, so make sure that you are ready with the needed documents at the right time.
4) PERSONAL GUARANTEES
Your properties can be used as personal guarantees without asking for too much from you if your activities in the real estate industry happen to become a success story now and then. Just make sure that you’re going to process all paperwork with precision and accuracy because this is what will separate a good fix and flip loan applicant from a bad one.
5) BE PROFESSIONAL ABOUT YOUR INTENTIONS
Fix and flip loans can be your ticket to getting more money in a shorter time, but only if you are running an honest business. Ensure that all the documents needed will be used for honest applications and not for fraudulent or illegal activities. Please refrain from doing anything bad because this is what lenders are looking forward to when they ask you all sorts of questions regarding your reasons on why you need additional funding for your business.
Loan experts charge loan borrowers with strict requirements to qualify for a fix and flip loan. They are especially demanding credit scores, property values, cash available for the down payment, and income records. In reality, successful real estate investors depend on hard money lenders to buy an investment property that enables them to sell and buy fix and flix properties. Fortunately, the DFW Specialty Lending has private money lenders that assist investors in buying non-owner-occupied single-family homes without delays from traditional lenders or red tapes.
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